NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit 10.1
This NONQUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is made as of August 7,
2007 (the “Grant Date”) by and between ASSET ACCEPTANCE CAPITAL CORP., a Delaware
corporation (the “Corporation”), and (the “Optionee”).
Recitals
A. Capitalized terms used and not defined herein have the meanings ascribed to them in the
Corporation’s 2004 Stock Incentive Plan, as amended and restated May 22, 2007 (the “Plan”),
a copy of which is attached hereto as Annex A.
B. The terms of the Plan are summarized in its prospectus, a copy of which is attached hereto
as Annex B. The Plan shall control over the prospectus in the event of any conflict or
inconsistency among them.
C. The Optionee serves as an Employee of the Corporation or a Subsidiary of the Corporation
and has been duly granted the Option (as defined below) in an effort to, among other things,
provide additional incentive to the Optionee in connection with his employment and to align the
Optionee’s interests with the Corporation’s long-term best interests.
Agreement
NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements
hereinafter set forth, the parties hereto agree as follows:
1. Grant of Option. Subject to the terms and conditions hereof, the Corporation
hereby grants, effective as of the Grant Date, to the Optionee the right and option to purchase
from the Corporation up to, but not exceeding in the aggregate, shares of the Corporation’s
Common Stock at a price of $ per share (being the closing price on the Grant Date)
(the “Option”). The Option being granted pursuant to this Agreement does not meet
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”), and, therefore, is intended to constitute a Nonqualified Stock Option.
2. Right to Exercise Option, and Term. The Option may not be exercised prior to
August 7, 2008. Thereafter, the Option shall become exercisable in installments as follows:
(a) 25% of the shares covered by the Option shall become exercisable on or after August 7,
2008;
(b) An additional 25% (50% cumulative) of the shares covered by the Option shall become
exercisable on or after August 7, 2009;
(c) An additional 25% (75% cumulative) of the shares covered by the Option shall become
exercisable on or after August 7, 2010;
(d) An additional 25% (100% cumulative) of the shares covered by the Option shall become
exercisable on or after August 7, 2011; and
To the extent not exercised, installments shall accumulate and may be exercised by the Optionee, in
whole or in part, in any subsequent period. The Board, in its sole discretion, may accelerate the
time at which any option may be exercised in whole or in part. Notwithstanding any other provision
of this Agreement, this Option shall not be exercisable after the tenth (10th) anniversary of the
Grant Date.
3. Exercise of Option.
(a) Conditions Precedent. The Optionee, from time to time during the period when the
Option hereby granted may by its terms be exercised, may exercise the Option in whole or in part as
at the time permitted, by satisfaction of the following conditions:
(i) Notice. By delivery to the Corporation of a written notice signed by the
Optionee, in substantially the form attached hereto as Annex C, stating the number
of shares that the Optionee has elected to purchase at that time from the Corporation and
representing that the Optionee is acquiring the shares being purchased for investment and
not for resale; provided, however, that this representation shall not be binding
upon the Optionee if the shares of Common Stock that being purchased are subject to an
effective registration statement under the Securities Act of 1933.
(ii) Payment. By delivery to the Corporation of
(A) The purchase price for shares of Common Stock to be acquired upon exercise
of the Option shall be paid in full in cash or by personal check, bank draft or
money order at the time of exercise.
(B) In lieu of the form of payment described above in subsection (A),
the Optionee may pay such purchase price in whole or in part either by surrendering
shares of Common Stock that are subject to this Option or by tendering shares of
Common Stock, which have been held by the Optionee for at least six (6) months and
which are freely owned and held by the Optionee independent of any restrictions,
hypothecations or other encumbrances, duly endorsed for transfer (or with duly
executed stock powers attached), or in any combination of the above. Shares of
Common Stock surrendered upon exercise shall be valued at the Stock Exchange closing
price for the Corporation’s Common Stock on the day prior to exercise, as reported
in The Wall Street Journal (or as otherwise reported by such Stock
Exchange), and the certificate(s)
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for such shares, duly endorsed for transfer or accompanied by appropriate stock
powers, shall be surrendered to the Corporation. If the Optionee is subject to
short swing profit restrictions under the Exchange Act and desires to exercise the
Option by tendering previously-acquired shares, then he or she shall do so only in
accordance with the provisions of Rule 16b-3 of the Exchange Act.
(b) Issuance of Shares. After satisfaction of the conditions described above in
Section 3(a), the Corporation shall issue the shares in the name of the Optionee and
deliver the certificates therefor to the Optionee.
4. Termination of Employment. As provided in Section 7.1 of the Plan, the
general terms and conditions of exercise of the Option shall be subject to the following:
(a) If, prior to the date that the Option first becomes Vested, the Optionee terminates
employment for any reason (other than after a Change in Control), the Optionee’s right to exercise
the Option shall terminate and all rights thereunder shall cease.
(b) If, on or after the date that the Option first becomes Vested, the Optionee terminates
employment for any reason, other than death or Disability, the Optionee shall have the right,
within the earlier of (i) the expiration of the Option, and (ii) three (3) months after termination
of his employment, to exercise the Option to the extent that it was exercisable and unexercised on
the date of the Optionee’s termination of employment, subject to any other limitation on the
exercise of the Option in effect on the date of exercise.
(c) If, on or after the date that the Option first becomes Vested, the Optionee terminates
employment due to death while an Option is still exercisable, the person or persons to whom the
Option shall have been transferred by will or by the laws of descent and distribution, shall have
the right within the earlier of (i) the expiration of the Option, and (ii) three (3) months after
the death of the Optionee, to exercise the Option to the extent that it was exercisable and
unexercised on the Optionee’s date of death, subject to any other limitation on exercise in effect
on the date of exercise.
(d) If, on or after the date that the Option first becomes Vested, the Optionee terminates
employment due to Disability, the Optionee shall have the right, within the earlier of (i) the
expiration of the Option, and (ii) three (3) months after the effective date of the termination of
employment, to exercise the Option to the extent that it was exercisable and unexercised on the
date of the Optionee’s termination of employment, subject to any other limitation on the exercise
of the Option in effect on the date of exercise. If the Optionee dies after termination of his
employment while the Option is still exercisable, the Option shall be exercisable in accordance
with the terms of Section 4(c) above.
(e) The Committee, at the time of the termination of the Optionee’s term of employment, may,
in its sole discretion, accelerate the Optionee’s right to exercise the Option or extend the
exercise period of the Option.
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(f) Shares subject to the Option that are not exercised in accordance with the provisions of
Section 4(a) through (e) above shall expire and be forfeited by the Optionee as of their
expiration date and shall become available for new grants and awards under the Plan as of such
date.
5. Change in Control. Notwithstanding anything contained herein to the contrary, in
the event of an Optionee’s Change in Position subsequent to a Change in Control, the Option granted
to the Optionee immediately shall become fully Vested and exercisable in full, regardless of any
installment provision applicable to the Option.
6. Effect on Term on Employment. None of the adoption of the Plan, the granting of
the Option or the execution and delivery of this Agreement shall be deemed to create or confer on
the Optionee any right to be retained or to continue as an Employee or interferes in any way with
the right of the Corporation to terminate the Optionee’s employment at any time.
7. Adjustments.
(a) The total number of shares of Common Stock subject to the grant of the Option (both as to
the number of shares of Common Stock and the purchase price per share), shall be adjusted pro rata
in accordance with Section 8.1(a) of the Plan. The foregoing adjustments shall be made by the
Board, whose determination in that respect shall be final, binding and conclusive.
(b) In the event of a proposed dissolution or liquidation of the Corporation, the Committee
shall notify the Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Committee in its discretion may provide for the Optionee to have the right to
exercise the Option in full until ten (10) days prior to such transaction as to all of the shares
of Common Stock covered thereby, including shares as to which the Option would not otherwise be
exercisable. In addition, the Committee may provide that any re-purchase option of the Corporation
applicable to the shares purchased upon exercise of the Option shall lapse as to all such shares,
provided that the proposed dissolution or liquidation takes place at the time and in the
manner contemplated. To the extent it has not been previously exercised, the Option shall
terminate immediately prior to the consummation of the proposed dissolution or liquidation.
(c) In the event of a merger of the Corporation with or into another corporation, the sale of
substantially all of the assets of the Corporation, or the reorganization or consolidation of the
Corporation, each outstanding Option shall be assumed or an equivalent option or right substituted
by the successor corporation or the parent or a subsidiary of the successor corporation. In the
event that such successor corporation (or the parent or a subsidiary thereof) refuses to assume or
substitute for the Option, the Optionee shall fully vest in and have the right to exercise the
Option in full, including shares which would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger
or sale of assets, the Committee shall notify the Optionee in writing or electronically that the
Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of
such notice, and the Option shall terminate upon the expiration of such period. For the purposes
of this Section 7(c), the Option shall be considered assumed if,
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following the merger, sale of assets, reorganization or consolidation, the option or right
confers the right to purchase or receive, for each share covered by the Optionee’s Option,
immediately prior to such transaction, the consideration (whether stock, cash, or other securities
or property) received in the merger, sale of assets, reorganization or consolidation by holders of
Common Stock for each share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares); provided, however, that if such consideration received in the
merger, sale of assets, reorganization or consolidation is not solely common stock of the successor
corporation (or the parent or a subsidiary thereof), the Committee may, with the consent of the
successor corporation, provide for the consideration to be received upon the exercise of the
Option, for each share of Stock subject to the Option, to be solely Common Stock of the successor
corporation (or the parent or a subsidiary thereof) equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of assets.
(d) The foregoing adjustments described in Section 7(b) and Section 7(c) shall
be made by the Committee. Any such adjustment may provide for the elimination of any fractional
share which might otherwise become subject to an Option.
8. Rights Prior to Issuance of Shares. The Optionee shall not have any rights as a
shareholder with respect to shares covered by the Option until the issuance of a stock certificate
for such shares. No adjustment shall be made for dividends or other rights with respect to such
shares for which the record date is prior to the date the certificate is issued. During such time
as all or part of the Option remains exercisable under this Agreement, the Corporation shall
provide the Optionee with such financial information relative to the Corporation, if any, as shall
be required under applicable law.
9. Non-Assignability. The Option shall not be transferable by the Optionee except by
will or the laws of descent and distribution. During the lifetime of the Optionee, the Option
shall be exercised only by the Optionee, except in the event of the Optionee’s Disability, in which
case the Optionee’s legal guardian or the individual designated in the Optionee’s durable power of
attorney may exercise the Option. Any transferee of the Option shall take the same subject to the
terms and conditions of this Agreement and the Plan. No transfer of the Option by will or the laws
of descent and distribution, or as otherwise permitted by the Committee, shall be effective to bind
the Corporation unless the Corporation shall have been furnished with written notice thereof and a
copy of the will and/or such evidence as the Corporation may deem necessary to establish the
validity of the transfer and the acceptance by the transferee or transferees of the terms and
conditions of the Option.
10. Securities Laws.
(a) Anything to the contrary herein notwithstanding, the Corporation’s obligation to sell and
deliver Common Stock pursuant to the exercise of the Option is subject to such compliance with
federal and state laws, rules and regulations applying to the authorization, issuance or sale of
securities as the Corporation deems necessary or advisable. The Corporation shall not be required
to sell and deliver or issue Common Stock unless and until it receives satisfactory assurance that
the issuance or transfer of such shares shall not violate any of the
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provisions of the Securities Act of 1933 or the Exchange Act, or the rules and regulations of
the Securities Exchange Commission promulgated thereunder or those of the Stock Exchange or any
stock exchange on which the Common Stock may be listed, the provisions of any state laws governing
the sale of securities, or that there has been compliance with the provisions of such acts, rules,
regulations and laws.
(b) The Committee may impose such restrictions on any shares of Common Stock acquired pursuant
to the exercise of the Option as it may deem advisable, including, without limitation, restrictions
(i) under applicable federal securities laws, (ii) under the requirements of the Stock Exchange or
any other securities exchange, recognized trading market or quotation system upon which such shares
of Common Stock are then listed or traded, and (iii) under any blue sky or state securities laws
applicable to such shares. No shares shall be issued until counsel for the Corporation has
determined that the Corporation has complied with all requirements under appropriate securities
laws.
11. Withholding Taxes.
(a) The Corporation shall have the right to withhold from the Optionee’s compensation or
require the Optionee to remit sufficient funds to satisfy applicable withholding for income and
employment taxes upon the exercise of the Option. The Optionee may make a written election to
tender previously-acquired shares of Common Stock, provided that the shares have an
aggregate Fair Market Value sufficient to satisfy in whole or in part the applicable withholding
taxes.
(b) If the Optionee is subject to the xxxxxxx xxxxxxx restrictions of Section 16(b) of the
Exchange Act, then he or she may use Common Stock to satisfy the applicable withholding
requirements only if such disposition is approved in accordance with Rule 16b-3 of the Exchange
Act. Any election by the Optionee to utilize Common Stock for withholding purposes is further
subject to the discretion of the Committee.
12. Disputes. As a condition of the granting of the Option hereunder, the Optionee,
as well as the Optionee’s permitted successors and assigns, legal guardian or the individual
designated in the Optionee’s durable power of attorney, agree that any dispute or disagreement
which shall arise under or as a result of the Option, this Agreement or the Plan shall be
determined and interpreted by the Committee in its sole discretion and judgment and that any such
determination and any such interpretation by the Committee shall be final and shall be binding and
conclusive for all purposes.
13. Provisions of Plan Controlling. The provisions of this Agreement are subject to
the terms and provisions of the Plan. In the event of any conflict between the provisions of this
Agreement, the Option, and/or the provisions of the Plan, the provisions of the Plan shall control.
[FOR THOSE WITH EMPLOYMENT AGREEMENTS:
14. Long-term
Consideration for Award. The terms and conditions set forth in
Annex D (including the terms of the Protective Provisions as defined therein) are hereby
incorporated
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by reference and made an integral part
of this Agreement. An invalidation of all or a part of
Annex D or the Protective Provisions, your commencement of litigation to invalidate, modify
or alter the terms and conditions set forth in Annex D or the Protective Provisions, or
your failure to perform your obligations under the Protective Provisions shall cause this Agreement
to become null, void and unenforceable.]
[FOR THOSE WITHOUT EMPLOYMENT AGREEMENTS:
14. Long-term
Consideration for Award; Non-Interference, Non-Disclosure and
Non-Competition Agreement. The terms and conditions set forth in Annex D (including
the terms of the Non-Interference, Non-Disclosure and Non-Competition Agreement as defined therein)
are hereby incorporated
by reference and made an integral part of this Agreement. [The
effectiveness of the obligations of the Corporation set forth in this Agreement are also subject to
the Optionee’s execution and delivery of the Non-Interference, Non-Disclosure and Non-Competition
Agreement.] An invalidation of all or a part of Annex D or the Non-Interference,
Non-Disclosure and Non-Competition Agreement, your commencement of litigation to invalidate, modify
or alter the terms and conditions set forth in Annex D or the Non-Interference,
Non-Disclosure and Non-Competition Agreement, or your failure to perform your obligations under the
Non-Interference, Non-Disclosure and Non-Competition Agreement shall cause this Agreement to become
null, void and unenforceable.]
15. Miscellaneous.
(a)
Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i) if physically
delivered, (ii) if telephonically transmitted by facsimile transmission, if such transmission is
confirmed by delivery by certified or registered United States Mail (with first class postage
pre-paid) or guaranteed overnight delivery, (iii) if transmitted via e-mail, if such transmission
is confirmed by delivery by certified or registered United States Mail (with first class postage
pre-paid) or guaranteed overnight delivery, (iv) five business days after having been deposited in
the United States Mail, as certified or registered mail (with return receipt requested and with
first class postage pre-paid), or (v) one (1) business day after having been transmitted to a third
party providing delivery services in the ordinary course of business which guarantees delivery on
the next business day after such transmittal (e.g., via Federal Express), all of which notices or
other communications shall be addressed to the recipient as follows:
(x) If to the Corporation, to:
ASSET ACCEPTANCE CAPITAL CORP.
00000 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(596.939.9600)
Attention: Secretary
00000 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(596.939.9600)
Attention: Secretary
(y) If to the Optionee, to the address set forth in the records of the Corporation.
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Such names and addresses may be changed by written notice.
(b) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the same instrument.
(c) Captions. The captions to the sections and subsections contained in this
Agreement are for reference only, do not form a substantive part of this Agreement and shall not
restrict or enlarge substantive provisions of this Agreement.
(d) Parties in Interest. This Agreement shall bind and shall inure to the benefit of
the parties hereto, their respective permitted successors and assigns.
(e) Complete Agreement. This Agreement shall constitute the entire agreement between
the parties hereto and shall supersede all proposals, oral or written, and all other communications
between the parties relating to the subject matter of this Agreement.
(f) Modifications. The terms of this Agreement cannot be modified except in writing
and signed by each of the parties hereto.
(g) Assignment. Except as otherwise expressly provided in this Agreement, the rights
and obligations provided by this Agreement shall not be assignable by any party without the prior
written consent of the other parties.
(h) Severability. In the event that any one or more of the provisions of this
Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
(i) Governing Law. The terms of this Agreement shall be governed by and construed in
accordance with Michigan law.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.
| Corporation: ASSET ACCEPTANCE CAPITAL CORP. |
||||
| By: | ||||
| Its: | ||||
| Optionee: | ||||
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ANNEX C
NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION
Attention: Secretary
Re: Notice of Exercise of Nonqualified Stock Option
Ladies and Gentlemen:
A Nonqualified Stock
Option was granted to me on (the “Grant Date”)
to purchase shares of the Common Stock of ASSET ACCEPTANCE CAPITAL CORP., a
Delaware Corporation (the “Corporation”), at a price of $ per share (the
“Option”), pursuant to a Nonqualified Stock Option Agreement, dated as of ,
between the Corporation and me (the “Agreement”).
I hereby elect to exercise my Option with respect to
shares.
[TO COME —
DESCRIBE METHOD OF PAYMENT PURSUANT TO SECTION 3(a)(ii) OF THE AGREEMENT.]
I represent that the shares of Common Stock that I am purchasing upon this exercise of my
option are being purchased for investment purposes and not with a view to resale; provided,
however, that this representation shall not be binding upon me if the shares of Common Stock
that I am purchasing are subject to an effective registration statement under the Securities Act of
1933.
| Optionee: | ||||
| (signature) | ||||
| Printed Name: | ||||
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Dated:
ANNEX D
Long-Term Consideration and
Corporation Recovery for Breach
Corporation Recovery for Breach
By signing and accepting your Agreement, you recognize and agree that the Corporation’s key
consideration in granting the Option is securing you long-term commitment to serve as its Chairman,
President and Chief Executive Officer who will advance and promote the Corporation’s business
interests and objectives. Accordingly, you agree that this Option shall be subject to the
following terms and conditions as material and indivisible consideration for the Option:
(a) Fiduciary Duty. During your employment with the Corporation you shall devote your
full energies, abilities, attention and business time to the performance of you job
responsibilities and shall not engage in any activity which conflicts or interferes with, or in any
way compromises, your performance of such responsibilities.
[FOR THOSE WITH EMPLOYMENT AGREEMENTS:
(b) Employment Agreement. You and the Company have entered into the Employment
Agreement dated , , as amended (the “Employment Agreement”).
(c) Survival of Commitments; Potential Recapture of Award and Proceeds. You
acknowledge and agree that the terms and conditions of this Annex D and the provisions of
Sections ___and ___through ___of the Employment Agreement (the “Protective Provisions”)
[i.e., non-interference, non-disclosure and non-competition related convenants] shall survive both (i) the termination of your employment with the Corporation for any reason, and
(ii) the termination of the Plan, for any reason. You acknowledge and agree that the grant of
Options in this Agreement is just and adequate consideration for the survival of the restrictions
set forth herein, and that the Corporation may pursue any or all of the following remedies if you
either violate the terms of this Section or succeed for any reason in invalidating any part of it
(it being understood that the invalidity of any term hereof would result in a failure of
consideration for the Agreement):
| (i) | declaration that the Agreement is null and void and of no further force or effect; |
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| (ii) | recapture of any cash paid or shares of Common Stock issued to you, or any designee or beneficiary of you, pursuant to the Agreement; | ||
| (iii) | recapture of the proceeds, plus reasonable interest, with respect to any shares of Common Stock that are both issued pursuant to this Agreement and sold or otherwise disposed of by you, or any designee or beneficiary of you. |
The remedies provided above are not intended to be exclusive, and the Corporation may seek such
other remedies as are provided by law, including equitable relief.]
[FOR THOSE WITHOUT EMPLOYMENT AGREEMENTS:
(b) Non-Interference, Non-Disclosure and Non-Competition Agreement. Optionee and the
Company have entered into the Non-Interference, Non-Disclosure and Non-Competition Agreement
[dated ,
] [in the form attached hereto as Annex
D-1] (the “Non-Interference, Non-Disclosure and Non-Competition Agreement”).
(c) Survival of Commitments; Potential Recapture of Award and Proceeds. You
acknowledge and agree that the terms and conditions of this Annex D and the
Non-Interference, Non-Disclosure and Non-Competition Agreement shall survive both (i) the
termination of your employment with the Corporation for any reason, and (ii) the termination of the
Plan, for any reason. You acknowledge and agree that the grant of Options in this Agreement is
just and adequate consideration for the survival of the restrictions set forth herein, and that the
Corporation may pursue any or all of the following remedies if you either violate the terms of this
Section or succeed for any reason in invalidating any part of it (it being understood that the
invalidity of any term hereof would result in a failure of consideration for the Agreement):
| (i) | declaration that the Agreement is null and void and of no further force or effect; | ||
| (ii) | recapture of any cash paid or shares of Common Stock issued to you, or any designee or beneficiary of you, pursuant to the Agreement; | ||
| (iii) | recapture of the proceeds, plus reasonable interest, with respect to any shares of Common Stock that are both issued pursuant to this Agreement and sold or otherwise disposed of by you, or any designee or beneficiary of you. |
The remedies provided above are not intended to be exclusive, and the Corporation may seek such
other remedies as are provided by law, including equitable relief.]
(d) Acknowledgement. You acknowledge and agree that your adherence to the foregoing
requirements will not prevent you from engaging in your chosen occupation and earning a
satisfactory livelihood following the termination of your employment with the Corporation.
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